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February 28, 2003
PG Economics Ltd announced today the availability of
its new report “GM Crops in Europe – planning for the end of the
moratorium”. It
objectively examines the likely future development of GM crops in Europe,
once EU-wide legislation is fully in place and the moratorium is lifted
– probably during 2003. The
report:
- outlines the key features of the legislation (including
proposals);
- presents the nature of GM arable crop technology trials in
Europe and the traits likely to be commercialised over the
next ten years;
- reviews the farm level impact of the four most cultivated
GM crops globally – the reasons why farmers are adopting GM
crops;
- examines current & future developments in both GM and non
GM derived markets; and
- forecasts likely GM arable crop penetration over the next
ten years.
It
is a valuable and thought provoking resource for anyone with interests in
business strategy planning and development and for those with
responsibility for delivering public information messages.
GM Crops in Europe – Planning for the end of the
moratorium
With the
anticipated lifting of the moratorium and the enactment of EU legislation
on GMO labelling and traceability, probably in late 2003, European farmers
will soon, for the first time, be able to choose whether to plant GM crops
or not, based on their benefits/costs relative to the market incentives
offered by conventional non GM seeds.
The new
legislation should also pave the way for European farmers and supply chain
users to plan for their introduction over the coming years.
The possibility of increased cultivation of GM crops in Europe will
have major implications for all stakeholders in the European food/feed
chains. Experience from the
USA and South America has demonstrated that GM crop technology can be
adopted at an extremely fast rate resulting in changes to farm and crop
protection practices, cropping systems, agrochemical prices, food/feed
distribution and prices.
The future development of GM crops in
the EU is clearly subject to considerable uncertainty and influence by a
number of variables. The report includes forward-looking analysis and
forecasts based on three possible scenarios for the development of key
influencing variables. These
are variables that affect both the level of demand for non GM products and
the planting of GM crops in the EU. These
scenarios are classified as ‘optimistic’, ‘pessimistic’ and
‘more likely’ – optimistic/pessimistic is taken from the perspective
of biotechnology uptake. These
scenarios are summarized in the table below.
Future scenarios - some key
influencing variables
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Scenario 1: Optimistic
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Scenario 2: More likely
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Scenario 3: Pessimistic
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Moratorium on import/use & on
planting in the EU lifted in Autumn 2003.
Submissions under 2001/18 for release onto the EU market
processed within one year
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Moratorium on import/use lifted
end 2003.
Moratorium on planting lifted in mid 2004.
Submissions under 2001/18 for release onto the EU market
processed in 18 months
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Moratorium on import/use lifted
mid 2004.
Moratorium on planting lifted in mid 2005.
Submissions under 2001/18 for release onto the EU market
processed within two years
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Tolerances for presence of GM
material in non GM seed set at 2% (ie, as existing seed
requirements).
Co-existence rules considered to be reasonable and manageable by
most farmers
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Tolerances for presence of GM
material in non GM seed set at 1%).
Co-existence rules considered to be acceptable but add some
limited costs for GM planting farmers
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Tolerances for the presence of GM
material in non GM seed set at 0.3%-0.5%). Co-existence rules considered to be more difficult
reasonable to comply with and add costs for GM planting farmers
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Brazil legalizes planting of GM
crops for crops harvested in 2004
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Brazil legalizes planting of GM
crops for crops harvested in 2005
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Brazil legalizes planting of GM
crops for crops harvested in 2006
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Biotech companies willing to
enter existing and ‘in pipeline’ GM traits for EU regulatory
approval for import/use and planting
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Biotech companies willing to
enter existing and ‘in pipeline’ GM traits for EU regulatory
approval for import/use.
Only willing to bring higher value seed crops like maize and
sugar beet forward for approval to plant
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Biotech companies willing to
enter existing and ‘in pipeline’ GM traits for EU regulatory
approval for import/use.
Limited interest in seeking approval for planting in the EU &
only after commercial sales established in non EU countries and for
highest (seed) value crops like maize that can cover high costs of
meeting Seed Directive requirements relating to GM presence
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Plant breeders prepared to
incorporate GM events into commercial breeding programmes and to
pro-actively seek development of competitive GM varieties
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Technology providers develop own
material and seek collaboration with plant breeders
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Limited interest in GM traits for
incorporation by plant breeders
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Farmers willing to adopt GM crops
based on technical and cost considerations when they become
commercially available.
Concerns about outlets for GM crops do not affect initial
take up significantly -
perceived to be easy to sell GM crops (eg, forage maize used on
farm, sales to feed compounders)
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Some farmers willing to adopt GM
crops based on technical and cost considerations when they become
commercially available but some others concerned about outlets for
GM crops being limited and do not initially adopt
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A limited number of farmers
willing to adopt GM crops based on technical and cost
considerations.
Concerns about outlets for GM crops being limited restricts initial
uptake of technology by farmers
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Supplies of non GM soy tighten by
2004
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Supplies of non GM soy tighten by
2005
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Supplies of non GM soy tighten by
2006
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Non GM soy price differential
with GM soy to 10% plus from 2005 – retailers fundamentally review
non GM policy in 2005
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Non GM soy price differential
with GM soy to 10% plus from 2006– retailers fundamentally review
non GM policy in 2006
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Non GM soy price differential
with GM soy to 10% plus from 2007– retailers fundamentally review
non GM policy in 2007
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GMO labelling of products becomes
widespread and anti GM sentiment falls on back of familiarity of the
label
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Limited availability of GMO
labelled products – slow decline in anti GM sentiment on back of
some, but not widespread familiarity
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Reluctance of supply chain to use
GMO labelling because of concern about remaining high levels of anti
GM sentiment – supply chain prepared to seek out and source non GM
alternatives to avoid GMO labelling
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Based on these scenarios, the report
includes forecasts of when reasonable volumes of seed containing GM traits
in the leading arable crops are likely to be available to EU farmers,
together with forecasts of likely GM crop penetration by 2013.
Key forecasts presented include:
- It is likely to be another 2-3 years before GM seed is
widely available to EU producers of maize and possible 3-4
years before GM seed is widely available for other crops like
oilseed rape and sugar beet. GM wheat is unlikely to available
to EU farmers until 2008-2010;
- In five years time the penetration of GM crop in EU arable
crop production is likely to be limited to no more than a 10%
share of cultivation in some crops like maize. This largely
reflects the time period required to complete regulatory
approval processes and to get GM Events into leading varieties
(in commercial quantities of seed) and the continued existence
(albeit declining) of some anti GM sentiment amongst
consumers;
- In ten years time, we perceive that GM arable crop
penetration in the EU will largely reflect the extent to which
specific pests and weeds (which are targeted by GM traits) are
considered to be a problem for farmers. Thus take up of insect
resistant and herbicide tolerant crops like oilseed rape,
sugar beet and maize will be concentrated in regions where
pests and weeds are perceived to be causing significant crop
losses and/or conventional control methods are considered to
be of limited effectiveness (or are more expensive than the GM
alternative). GM crop uptake (of traits with agronomic traits)
in wheat and potatoes will however probably be more limited in
2013 than for other crops mainly because the traits available
are fairly new to the market.
Forecast GM crop penetration for
leading agronomic traits to 2013
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Crop/Trait
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Commercially available to EU farmers
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% of EU area planted to trait in 2008
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% of EU area planted to trait in 2013
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Insect
resistant maize
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2005-2007
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10
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25-30
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Herbicide
tolerant maize
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2005-2007
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10
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35-45
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Herbicide
tolerant oilseed rape
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2006-2008
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0-5
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20-30
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Herbicide
tolerant sugar beet
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2006-2008
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5-10
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40-50
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Insect
resistant cotton
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2006-2008
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5-10
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40-50
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Herbicide
tolerant cotton
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2006-2008
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5-10
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40-50
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Herbicide
tolerant wheat
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2008-2011
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0
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15-25
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Herbicide
tolerant soybeans
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2007-2009
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0-10
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30-40
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Herbicide
tolerant rice
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2007-2009
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0-5
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30-40
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Nemotode
& fungal resistant potatoes
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2010-2012
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0
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5-10
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Fungal
resistant oilseed rape
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2010-2012
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0
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5-10
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PG
Economics - the authors
The report has been principally
researched and written by two of the directors of PG Economics:
Graham
Brookes
An economist who has 16 years
experience of providing economic & market analysis & consulting
services to both private and public sector customers.
He has in-depth knowledge of the markets and supply chain
developments in many sectors including cereals, oilseeds and processed
product derivatives (eg, animal feed, oils, meals/proteins).
He has considerable experience and understanding of technology
change issues, policy issues and impact on markets, especially relating to
European Community Agricultural/Rural policy and the WTO.
He has recently written papers on market dynamics for biotech
verses non-biotech products, GMO identity preservation and segregation
system economics and is author of the first detailed examination of the
farm level impact of commercially grown GM crops (bt maize in Spain) in
Europe.
Peter
Barfoot
An agricultural economist with 17 years experience in the
agricultural biotechnology industry and in consultancy. Peter previously
worked at the Agricultural Genetics Company for 12 years in project
management, business planning and development.
He has a good understanding of technology and its application in
agricultural and food markets. He has written and completed many market
research projects on the market development and exploitation of
agricultural biotechnology over the last 5 years.
He has recently undertaken research on potential new GMO product
development in a variety of crops including soybeans, oilseed rape, wheat,
barley, maize and rice.
PG
Economics
Independent and objective consultants
servicing the plant genetic, agricultural, agricultural supply, trade and
food industries. PG Economics
provides advisory and consultancy services on all aspects of the
application of new technology to agriculture and other natural
resource-based industries. Our
specific areas of specialisation are plant biotechnology, agricultural
markets and policy impact.
This
report can be purchased for £795.00.
An acrobat (electronic) version is also available for those wishing
to make the report available to multiple users within their organisation:
price £2,400.00
PG
Economics Limited
-
Wessex
Barn Frampton Dorchester Dorset DT2 9NB UK
Tel: +44
(0)1300 321501 Fax/Voicemail: +44 (0)1300 321502
/
44 (0)1303 840959
Email: graham.brookes@btinternet.com
- peter.barfoot@bioportfolio.com
Click here to view table of
contents in
PDF format
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